Don't Do Business In China Unless You Understand The Concept Of Mianzi

It's no secret that doing business in Asia requires an entirely different mindset. There's a stronger culture of deference and obedience, which plays deep into how corporations are run.

This ethos both builds and breaks companies, as we saw with the Olympus scandal in Japan.

Sylvia Vorhauser-Smith over at Forbes recently wrote about the most important thing to know about doing business in China. It's Mianzi, or the idea of saving face: "We can all relate to the embarrassment we feel when our flaws or failures are publicly exposed, but the Chinese (along with many other eastern nations) have a super-sensitive radar for this."

She relayed a story about an American executive who publicly criticized a Chinese sales manager in front of his peers, and after that meeting, the guy never returned to work. It's an extreme case of Mianzi, but it captures just how differently Americans and East Asian countries do business.

With money pouring into China, we're going to come across more situations like this. David Chao, a venture capitalist with offices in Beijing and Tokyo, told Stanford Business Magazinethat the "underlying Chinese culture is very unforgiving to people who fail."

Ultimately, at the heart of Mianzi is fear — and that's a powerful emotion that will drive people do irrational things, like quit a well-paying job over a personal embarrassment.